Regulatory Alerts2012-12-07
SBD Opinion No. 2012-1 Credit Exposure Limits
The Alabama State Banking Department issued this opinion to provide general guidance on credit exposure limits and debt aggregation pursuant to Alabama Banking Code Section 5-5A-22 and Regulation No. 14. The document requires banks to aggregate direct or indirect loans to borrowers, their related entities, and associated groups to prevent unsafe concentrations of credit risk. It outlines a six-step process for determining compliance, including identifying economically related borrowers based on common benefit, repayment sources, purpose, and control, while illustrating these rules through hypothetical examples of violations.
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